THE WORLD

Free Trade Proves Devastating for Mexican Farmers

Whether raising hogs or crops, few can compete with U.S. agribusiness in the NAFTA era.

QUERETARO, Mexico — Ask hog farmer Juan Manuel Maya what free trade has done for him, and he'll tell you in a broken voice, standing amid his silent and empty pens, that it has destroyed him.

Maya called it quits this month after 20 years, selling off the last of the 1,200 sows that once produced thousands of piglets annually for feedlots all over Mexico. A veterinarian, Maya loved hog farming, plowed $2 million into leading-edge technology and was considered a pillar of his industry.

But it wasn't enough to ensure survival. Like thousands of other Mexican hog farmers, Maya, 61, was overwhelmed by the U.S. swine imports that have flooded this country since the North American Free Trade Agreement took effect in 1994. The trade pact is gradually erasing tariffs on all U.S. farm products, forcing a head-to-head competition that few Mexican growers are up to.

"What a sad place. What was all prosperity and productivity is now like a cemetery," said Maya of his farm, which once bustled with 35 employees and the arrivals of a dozen big trucks a week to haul his piglets away. Deserted and deathly quiet, his farm 125 miles northwest of Mexico City is up for sale.

NAFTA has been beneficial for Mexico in many ways. It has opened up the economy to foreign investment, helped modernize industry, lowered consumer prices and encouraged democratic reforms. Industrial exports have boomed.

But few would argue that NAFTA has been anything but devastating for Mexican farm families, which account for 23% of Mexico's 100 million people. Many farmers simply cannot compete with low-cost U.S. imports of grain, vegetable and livestock now pouring into Mexico at low or zero duty. Maya and thousands like him are giving up.

U.S. farms are getting bigger and bigger and have become much more efficient producers than almost any growers in the world. That efficiency is aided by high-tech growing techniques, low-cost financing and enormous government production subsidies, exemplified by the $190-billion farm bill passed in May.

It's not just Mexico's hog farmers who are suffering. Growers of corn, rice, pineapples, sugar, apples and poultry are foundering in the sea of U.S. imports. Farm failures are thought to be causing an exodus of peasants from the country to the cities -- and to the United States. Maya said 17 of the 35 employees he let go have immigrated illegally to the U.S.

But hog farmers are among the hardest hit. A third of Mexico's 18,000 swine producers have gone out of business since NAFTA took effect, the Mexican Hog Farmers Assn. says. Why? U.S. pork imports have more than doubled and have grabbed a 40% market share among Mexico's consumers and food processing firms, up from just 5% before.

The value of U.S. hog imports in Mexico rose to $344.9 million last year, more than double the $134.7 million in 1993, the year before NAFTA took effect. Meanwhile, Mexican hog exports to the United States were just $4.5 million, half the $11 million in 1993.

Maya has no doubt that it was time to exit. He knew that price competition would only intensify Jan. 1, when the final remnants of import duties on U.S. hogs and hundreds of other agricultural items are eliminated, allowing all U.S. farm products except corn, powdered milk and beans to enter Mexico duty-free. In 2008, tariffs on those three final categories will be abolished.

He also feared the consequences of the 10-year, $190-billion farm subsidy bill that took effect Oct. 1. It raised existing U.S. government support by 78%, a move that tilted the playing field even more.

Farmers aren't sitting idly by. Protests, marches and roadblocks by growers are increasingly common in Mexico: 900 hog farmers from all over Mexico shut the Nuevo Laredo border crossing in June for four hours. The commotion has prompted President Vicente Fox's promise to take a hard line in his meeting today with President Bush at the Asia-Pacific Economic Cooperation meeting in Baja California.

Fox said last week that he will ask Bush to cut the subsidy package, which he warned could further damage Mexican farmers and accelerate illegal migration.

"We are going to be adamant. We are analyzing the latest measures that the United States has taken in [agriculture], and however small they may be, if there is a violation in the free trade agreement, we will act with the greatest firmness," Fox said.

Other top government officials also are talking tough. Economy Minister Luis Ernesto Derbez warned that the government would file more anti-dumping claims against the U.S. unless something is done to fix the "asymmetrical" farm trade relationship. Agriculture Ministry officials have promised to give hard-pressed farmers some sort of financial "armor" but have not specified what it might be or how it would be paid for.